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Borderline Abused Ohio State Student Ready to Start Digging Out of Debt. – Debbie

“Dear Steve,

I am a student at Ohio State, and I have about a year left to go in school. I am pretty detached from my parents, who were both unfit and borderline abusive as I was growing up.

I left home at sixteen to make my own way, and since then I have not seen a dime from my parents as far as financial support goes. I have always worked as much as I could while going to school, but obviously I had to take out loans at one point.

I will graduate with appox. 48,000 in student loan debt, only 10k of which will be private (the rest federal). My EFC is always really high because they count my income as well as my parents, however my parents make very little money to begin with.

My mother is now unemployed, but before her company closed she made appox. 28k per year, and my father is disabled and living off social security. I still live off my loan refunds for the most part, and use my income to offset living costs and pay off credit card debt (~5000.00). I work as a server and make a pretty good amount of money which I usually use the excess of to make my credit card payments.

Last year my father took out a PLUS loan for me, however he has no means of repaying it so I agreed to pay the loan off myself. I was wondering if you thought it would be better for me to start making payments now, or defer until I graduate? It would be possible for me to make small payments now, but not easy.

Debbie”

Dear Debbie,

First let me say WOW! You’ve done more to care for yourself than a lot of people do. To have left home at 16 and now getting ready to graduate from college, even with the debt, you rock.

Not to say you are average in any way, but let me share my experience with you. The typical pattern I see is that graduating students are not ready for the expenses that come with not having the support of the school community.

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If you don’t have any money in a savings account right now I think you are better off deferring the loan and saving all the cash you can in the meantime. You need to have some sort of cash safety net once you graduate.

If you save the cash and then don’t need it, you can pay some towards the loan. If you pay the loan and don’t save and need it, you’re screwed.

Does that make sense?

Keep me posted on your progress in life. I’m really interested to see what happens.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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